If demand is linear (a straight line) then price elasticity of demand is ?
Correct answer: A. elastic in the upper portion and inelastic in the lower portion
- A. elastic in the upper portion and inelastic in the lower portion
- B. inelastic in the upper portion and elastic in the lower portion
- C. inelastic throughout
- D. constant along the demand curve
Explanation
On a straight-line demand curve, elasticity is not constant: the upper portion is elastic, the midpoint is unit elastic, and the lower portion is inelastic. Thus option a gives the correct pattern.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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